Goal of stewardship, corporate governance codes is long-term, sustainable growth of firms, says ex-CIO of Japanese pension fund > 지배구조

2026 Hankyoreh International Corporate Governance Forum | Hiromichi Mizuno, a former CIO for Japan’s Government Pension Investment Fund, talked about Japan’s soft law approach to corporate governance reforms and universal ownership of the capital market

“If you read the original stewardship code and corporate governance code, it’s very clear that the goal of those codes and those regulations was to promote the long-term, sustainable growth of Japanese corporations.”

These remarks were made by Hiromichi (Hiro) Mizuno, a former chief investment officer (CIO) for Japan’s Government Pension Investment Fund (GPIF), at the 2026 Hankyoreh International Corporate Governance Forum, which took place on Feb. 4 at the National Assembly Members’ Hall in Seoul’s Yeouido neighborhood, with the theme of “How to Approach the ‘Korea Premium’ Era.”

For the South Korean government to succeed with corporate governance reforms, he stressed, it is important to make clear that the goal is to promote long-term, sustainable growth for companies. 

A stewardship code is a set of guidelines that pension funds, asset management companies, and other organizational investors need to follow to faithfully manage the assets of customers — including the public in general. It stresses the importance of working to elevate company and shareholder value through active dialogue with investment recipients and the exercise of decision-making authority.

During the forum, Mizuno had a conversation with Seoul National University professor Kim Woo-jin on the topic of “the role of the public pension fund in improving and valuing up Japan’s governance structure.” Japan has reaped considerable rewards by consistently pursuing corporate governance and value-up policies since 2012, when Shinzo Abe was prime minister.

South Korea bears many similarities to Japan in terms of its corporate governance structure and capital market. The experiences vividly shared by Mizuno from his five years as GPIF’s CIO offer numerous implications for the South Korean case.

At the same time, South Korea also clearly differs from Japan in certain respects, including the presence of chaebol — largely family-run conglomerates. In that sense, it is unlikely to succeed simply by blindly following Japan’s course.

Shortly after the forum, the Hankyoreh published a two-part summary of Mizuno’s remarks. This led to many requests for more detailed content, and the decision was made to share the full text of the conversation.

Mizuno served as GPIF’s CIO from 2015 to 2020, while Abe was prime minister. His focus was on increased ESG investment with an emphasis on the environment, society and governance, as well as encouraging adherence to the stewardship code by institutional investors. In the process, he played a major role in GPIF’s contributions to improving Japan’s corporate governance structure and promoting stock market value.

Since leaving GPIF, he has taken part actively in international initiatives on climate change, biodiversity, and financial innovation. He has worked to promote responsible financial practices and create long-term value in capital markets and all areas of industry.

Kim Woo-jin: What have you been working on since leaving GPIF in 2020?

Hiro Mizuno: I’ve made corporate governance and sustainability my life’s work and I have been trying to find a way to improve stewardship by institutional investors. At the same time, I’ve been trying to figure out what is the best corporate governance scheme. After GPIF, I advised many institutional investors on their stewardship activities and engagement activities. On the other hand, I joined the French company Danone and Tesla on their boards to exercise corporate governance myself. 

Kim: GPIF has played a very important role in improving corporate governance and the valuation of the stock market in Japan. How would you evaluate GPIF’s contributions?

Mizuno: Corporate governance is not something fixed in stone. In every country and every market, it’s still developing. To answer the question, when I arrived at GPIF in 2015 after working abroad for 20 years, the first stewardship code and corporate governance code were already implemented. You guys talk a lot about the “Korean discount” [i.e., the notion that Korean stocks are chronically undervalued — ed.], but at that time, the Japanese stock market was not performing either, and people saw the return on equity (ROE) and low PBR (price-book ratio) as the reason for that performance. 

So, the FSA — the Financial Supervisory Agency and Tokyo stock market were trying to find a way to improve the profitability of Japanese companies, namely, by improving ROE. They thought the corporate governance code and stewardship code, which were introduced by the British, were a good way to put pressure on the government. 

But if you read the original stewardship code and corporate governance code, it’s very clear that the goal of those codes and those regulations was to promote the long-term, sustainable growth of Japanese corporations. So, when I arrived at the GPF, I realized I was now sitting on US$1.5 trillion, and my mandate was to contribute to the 100-year sustainability of the Japanese public financial scheme. And at that time, I felt like GPIF had to act as a responsible owner by promoting the sustainability of the capital market. And I thought stewardship activities and corporate governance engagement were good tools to do that.

Kim: Could you elaborate more on the role of the “universal owner”?

Mizuno: The GPIF, like [Korea’s National Pension Service] or other big asset owners, actually owns the capital market universe. So, you need to act for the benefit of the universe, not the benefit of just your portfolio for short-term performance. If you say I played a significant role in Japanese corporate governance, I’ll just say that I tried to play a more active role to promote the importance of long-termism in capital markets. And the stewardship code or corporate governance code are some factors which appear to be very effective. So, I use corporate governance and ESG very often to promote that. Because there’s an alignment between the long-term universal ownership investment strategy and corporate governance advocacy, I think that people accepted that and responded positively. 

Kim: Stewardship codes and corporate governance codes follow the tradition of so-called “soft regulation,” rather than a hard legal approach. Japan uses not a common law system, but a civil law system based on codified statutes. How effective do you think the soft law approach is in the Japanese context?

Mizuno: When I first saw soft laws, I thought that they would be very suitable for the Japanese corporate mindset. I was very certain that as soon as the government passed the soft law, 99% of Japanese companies would comply — and I was right. 

If you make a mandatory, hard law, it’s very hard to set a high bar because you cannot leave anybody behind. I thought that if the FSA tried to introduce a hard law, it would end up either with a very low [bar] or would take ages because they needed to go through all the other consensus processes. The soft law worked very well for labor leaders and from the corporate perspective, it worked well because they at least have to comply or explain their choices — but it’s easier to comply, because [if you don’t], it requires guts to explain [why not]. It’s easy to register the law if it’s a soft regulation because you don’t need to persuade everybody. Almost as soon as the corporate governance score was implemented, the corporate leadership was complaining and criticizing that it was impossible to get two external board members or female board members. But the next year, all of them complied. Sometimes, soft law works better. 

Kim: How did other institutional investors respond to the soft law approach?

Mizuno: We became their role model. They used the GPIF as the reason for them to have to, to actually do something. Japanese private asset managers have not been as active as I had wished. But I at least feel that they were influenced by us and maybe pressured by GPIF to be a bit more active. To be honest, you cannot really say that a government pension fund like the GPIF or NPS is particularly designed to be very active in this field. I pushed the envelope myself because I felt that it was very important for the performance of Japan’s stock market. 

Kim: What Japan did as part of these soft regulations was a plan called the “management perspective focusing on stock market valuation and cost of capital.” The Korean government tried to do something similar last year, but the media here framed it as though Japan’s rules were mandatory, whereas Korea’s initiative was voluntary, and thus ineffectual.

Mizuno: I’ve never seen any media that really understands corporate governance — so it’s not only Korean media. Japan started with soft law, and the framework is still soft law. As soft laws, they continue to evolve. And then some of those are now mandatory. But I think that soft law should come first, because when you push some agenda, first of all, you need to find the people who are willing to do it. So the soft law scheme facilitates this approach. 

Kim: I’m curious about the scope of engagement that GPIF actually carries out. The Taiwanese system is very actively engaged in the sense that they raise lawsuits and so on. Does the GPIF go that far? Does it recommend candidates for directors? Or is the extent of its engagement much softer?

Mizuno: We actually sued Toshiba [in 2016, when an accounting scandal brought Toshiba share prices down, hurting the GPIF — ed.]. The corporate world is very afraid now that the GPIF may come and sue them. But that case was almost a criminal case, which is why it definitely damaged the value of our portfolio.

I really don’t think lawsuits are ideally the action that investors should be taking. When I was on the board of Tesla, we were sued by many shareholders, and quite a few of those, I think, were not actually helpful in improving the corporate value. Also, you cannot make the assumption that every shareholder is smart — some of them are really dumb. So, I think going forward with a lawsuit is the ultimate action you can take. But generally speaking, I think public pension funds as asset owners have to foster the perception that we are all in the same boat. We’re not trying to topple the boat; we’re trying to be on the boat and go on better journeys. 

Hankyoreh: In Korea, since the new government came in, we have had drastic changes in our commerce law. What is your assessment of what’s happened in Korea over the past 10 months or so?

Mizuno: I’m not closely following what is happening in Korea, so I’m hesitant to comment. But I think they have to design it really well because the stock market can react without really understanding the implications of new legislation or new market rules. So you cannot judge [whether a policy is succeeding] by the short-term performance of the stock market. 

But Korea is now talking about corporate governance, which is important. But the point is that your administration needs to be very clear about why you want to improve corporate governance. As I said, I supported the Japanese government at the time because the purpose [of its policy] was very clearly to promote the long-term sustainable growth of Japanese corporations. So you probably want to make sure that the administration is aligning its interests with market participants as a whole. 

Kim: You mentioned “alignment of interests.” One of the biggest differences between Korea and Japan is that we have many publicly traded companies that are still controlled by family controlling shareholders, known as “chaebol.” That, coupled with our excessively high inheritance tax rate, means that families sometimes do not like their stock prices going up. So there’s a strong divergence of interests. That means that in Korea, it’s much more difficult to implement this type of corporate governance reform because the interests are not really aligned with the controlling families. Where do we go from here?

Mizuno: I think that if you wanted to have a vibrant capital market or stock market, and to keep attracting foreign investors, you need to protect the minority investors, period. If international institutional investors think the Korean market doesn't protect the alleged interests of minority shareholders, they won't invest, which results in a “discount.” 

But on the other hand, a company having an owner-family, or a core owner, is not always a negative thing. Having a long-term owner itself is not always a bad thing. The statistics tell us that the New York Stock Exchange average holding period for shareholders is less than two months. How do you expect a two-month shareholder to have a long-term dialogue with the corporation? But if [having a core owner] results in neglecting minority shareholders, that really limits the attractiveness of the Korean stock market. I think the owners have to pay attention to that. From the investors’ perspective, it’s important for Korean legislation and market regulators to protect minority shareholders, but I think owners should find a way to contribute as the owners of the company. 

Kim: What do you think of Korea’s NPS taking on a more proactive role in stewardship of the market?

Mizuno: I think the NPS has also embraced the concept of universal ownership. It is the owner of the stock market. I think it has about 10% of the Korean stock market. The GPIF, while I was there, had about 8%-10%, so similar. The first thing I did was to announce to the market that we were going to be their anchor investor, and that my long-term interests are totally aligned with the Tokyo Stock Exchange. We have aligned interests in improving your business and performance. 

Kim: What specific actions did you take?

Mizuno: We actually gave up on trading activities because I understood that the corporate leadership was very afraid that the GPIF would sell their stock if they didn’t listen to what I, Mizuno, was saying. We also set a regulation not to exercise our voting rights ourselves. One, it’s very hard to hire somebody who understands a business better than its CEO. You need to respect the person doing the business. So we outsourced our voting rights to external money managers. When I arrived, on one hand, I became very vocal about corporate governance and ESG and I started engaging and promoting dialogue. On the other hand, I kept saying. “I'm not trading, I'm not exercising my vote because I don't like you.”

People continue to have a fear that the national pension fund will use its voting power, or ownership or trading ability, to influence the company. I think that can create a lot of conflicts. I personally doubt that trying to promote more activism by the pension fund will actually come up with positive results. First of all, in terms of ability, it’s not realistic. And second, in terms of how to create common interests, that can sometimes work against it. So, something Korea should consider is what the best use of the pension fund as a responsible owner of your stock market would be. 

By Kwack Jung-soo, Hankyoreh Economy and Society Research Institute senior staff writer

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